Hello all ,
Im not the brightest person in the world, but I have never know or heard of a r/s having a positive impact on the stock price. Im considering taking profits in cprx, and moving into zlcs, but the talk of a r/s makes me nervous. Can anyone give me their opinions on the probaility of it happening, and if so the impact ?
Thanks all and have a great weekend.
Look. IF a RS happens, the statistics show the market cap will likely (but not definitely) fall. That's just the way it is. It shouldn't matter, but the psychological impact of it usually causes a negative reaction.
But let's say you hold off buying, because you're worried about a reverse split, and then it doesn't happen. What if the NASDAQ say's they've granted a 180 day extension to regain compliance? If THAT happened, the price would likely bounce fairly strongly, and then you'll be kicking yourself, because there will be little chance of buying at today's valuation prior to significant news scheduled for Oct/Nov. The bottom line is, if you wait to see how the reverse split plays out, you're liable to get burned. If Z160 results are positive, it won't matter what happened with the RS. ZLCS is going to soar. JMHO.
I agree. Why not play both possibilities?
1. Maintain a current long position.
2. Keep some chips off the table to buy in if the price drops as a result of the need to split.
Less greed, but more security. JB
"the bad-model problem" come into play when discussing r/s in general (mfg, services, etc i.e "sick companies") and r/s in a developmental bio companies. It is based on the pps returns on a company that does a r/s is based on a it being priced on eps and simular measures. This set of numbers that develompental companies are "lumped" into give a slanted measure of performance post r/s. For development companies the main driving factor is the binary event than the r/s on near and long term pps. While it seems the trend is down, that is primarily due to a failure of the event than to the r/s... That's what I've been able to gleem from my reading today....
Neostem did a reverse split earlier this year (NBS) because they wanted to attract institutional investors by getting the stock above $5, as many institutions are not allowed to invest in stocks trading below $5. Thus far it has been a success.
Sentiment: Strong Buy
In mid 2012 SRPT did a reverse split, to get the PPS above one dollar and avoid delisting. They released positive phase 2 results in October shortly after the R/S. A look at their one year chart shows there has been a very positive effect on their PPS. As mentioned below, however, it had little to do with the R/S.
If you're concerned about a R/S, or negative clinical trial results, or an unfavorable FDA decision, wait until those issues with ZLCS have been resolved.
an RS sucks. it is psychological really, but trends show stocks subject to RS in this way have a much more difficult time recovering. but in zlcs case, an RS would mean the trials are most likely nagative. the management does NOT want an RS, and if they are seen holding back info, most of the day traders - who are largely responsible for the volume - will SELL, and longs will be left holding the bag.
A reverse split before results are released doesn't say anything about trial results. It would be highly illegal for the company to do a reverse split before releasing results because they knew they'd be negative. A reverse split will be done because the stock could not become compliant with NASDAQ. What part of this don't you understand?
Secondly, according your logic, SRPT shouldn't be worth jack squat right now. As another poster astutely pointed out, they did a reverse split to avoid a NASDAQ default shortly before releasing incredible results. The stock just hit a new 52-week high today, several hundred percentage points above where the stock was right after the reverse split.
There's certainly a distinct possibility results will be negative (and it is certainly wise to sell some shares before results are released), but a reverse split won't be an indicator of that. Not sure why you continue to create cause/effect relationships where they don't exist. You're either manipulative or an emotional investor. Look into Occam's razor someday.
Nobody will be able to tell you why the RS is bad, because it isn't bad by itself, only if followed by dilution, but it is not the case. I've seen many in my life and some drove the price down, some up and some didn't move it at all.
There are many ppl in this board (probably shorts or traders) suspiciously fixated on letting everyone know about the RS, in order to cause fear but they all fail to explain why the RS is bad.